What Are the Challenges of Diversifying Collateral?
While diversifying collateral has many benefits, it also comes with challenges:
Valuation: Accurately valuing diverse assets can be complex and time-consuming. Documentation: Proper documentation is required to legally secure different types of collateral. Maintenance: Some assets, like real estate or equipment, require regular maintenance to retain their value. Market Fluctuations: The value of certain assets can fluctuate based on market conditions, affecting the overall collateral value.